The founders merely translated existing practices into a piece of software. While the demo was a little off, the pain point is pretty valid.
As a manufacturer,I have seen factories loose contracts over 20 cents, while the same goods is retailed 4X-5X margin at $85. At the end of the day factories rarely make margins on COG (Cost of Goods), but survive on the residues of efficiency. Even though volume is the game, brutal efficiency is the rule.
I personally feel it’s a misplaced backlash on the founders or the factories, while the main enablers are the Big retailers. Factories are at the mercy of big retailers, their relationship dynamic akin to mob boss-henchman, where the factories simply follow the orders.
Most factories practice two modes of compensation:
1. Per pc rate - Payment is directly tied to the output, more efficient. Requires skilled workers and can sometimes be a little costlier and impractical. Defects are deducted from the workers pay.
2. Monthly salary - This setup can accommodate semi skilled workers since each worker only handles one part of the whole. It’s a relatively cheaper process. However inefficiencies can easily creep in, defects can pile up which can wipe off the whole margin and ruin the factory.
I don’t believe in running a sweatshop, but even well run humane factories have to battle inefficiencies all the time. The line between marginal point inefficiencies can mean canceled contracts, cancelled goods and financial losses.
At the end of the day it’s the workers who have to take the brunt. The upside of efficiency is timely wages; the downside is already obvious.
The upside of inefficiency is a little break for workers; the downside is job loss and unpaid wages.
Hence I am not a fan of mass production esp under contract from Big retailers.
Most factories practice two modes of compensation: 1. Per pc rate - Payment is directly tied to the output, more efficient. Requires skilled workers and can sometimes be a little costlier and impractical. Defects are deducted from the workers pay.
2. Monthly salary - This setup can accommodate semi skilled workers since each worker only handles one part of the whole. It’s a relatively cheaper process. However inefficiencies can easily creep in, defects can pile up which can wipe off the whole margin and ruin the factory.
I don’t believe in running a sweatshop, but even well run humane factories have to battle inefficiencies all the time. The line between marginal point inefficiencies can mean canceled contracts, cancelled goods and financial losses. At the end of the day it’s the workers who have to take the brunt. The upside of efficiency is timely wages; the downside is already obvious. The upside of inefficiency is a little break for workers; the downside is job loss and unpaid wages.
Hence I am not a fan of mass production esp under contract from Big retailers.